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On Monday, Stifel analysts, led by Benjamin Nolan, maintained a Buy rating on New Fortress Energy (NASDAQ:NFE) with a price target of $16.00, as the stock trades at $11.17, showing an 11.8% gain over the past week. The firm held a conference call with the company’s management last week to address queries about the complexities within the business operations. According to InvestingPro, analyst targets for NFE range from $8 to $34, with multiple analysts recently revising earnings estimates upward.
New Fortress Energy, which specializes in energy infrastructure and liquefied natural gas (LNG) operations, is currently focused on reducing its leverage, with InvestingPro data showing a significant debt burden of $9.5 billion and a debt-to-equity ratio of 5.06. The impending sale of its Jamaica business is seen as a critical step towards this goal. An announcement regarding this transaction is expected shortly, which will mark the first phase of the company’s strategy to strengthen its balance sheet.
The second phase involves repaying debt. Details on this process were discussed, though specific plans were not disclosed in the provided context. The final step for New Fortress Energy is to convert the capital already invested into growth of cash flows. This transition is deemed essential for the company’s financial health and future development, particularly given the company’s current negative free cash flow yield of -67%.
Stifel’s analysis suggests that New Fortress Energy’s stock presents a binary outcome due to its credit profile. However, the firm is optimistic about the company’s prospects. If New Fortress Energy can successfully enhance liquidity and cash flows, Stifel anticipates that the potential for gain significantly outweighs the risk of loss.
Investors and market watchers are now looking forward to the upcoming announcement concerning the sale of the Jamaica business, which is likely to influence the company’s stock performance in the near term.
In other recent news, New Fortress Energy has reported its fourth-quarter 2024 earnings, significantly surpassing analyst expectations. The company achieved an earnings per share of $0.13, more than double the forecast of $0.06, and reported revenue of $679 million, exceeding projections by over $131 million. Despite these positive earnings results, New Fortress Energy also reported a substantial net loss of $240 million for the quarter. Meanwhile, the company has secured a $1.27 billion credit agreement, involving amendments to existing credit facilities and new financial obligations. The funds are allocated for capital expenditures related to the company’s FLNG2 assets and other corporate expenses.
Stifel analysts have maintained a Buy rating on New Fortress Energy, although they have adjusted the stock’s price target to $19 from $23. The analysts noted that New Fortress Energy’s adjusted EBITDA surpassed expectations, partly due to delayed recognition of cargo sales. They also highlighted the company’s growth prospects in Puerto Rico and Brazil, with the anticipated startup of FLNG2 expected to significantly boost cash flow. Furthermore, Stifel analysts are optimistic about the company’s ability to enhance liquidity and cash flows, despite the risks associated with its credit profile. These developments reflect New Fortress Energy’s ongoing efforts to improve its financial standing and pursue strategic growth opportunities.
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